This now serves as a blog to collect some of the comments I make on other blogs related to management improvement (Deming, lean thinking, six sigma, leadership, systems thinking, respect for people...).

Thursday, March 23, 2006

Secrets of the World's Best Companies

Not even the most successful companies in the world are managed by the book. Great management formulas aren't handed down on stone tablets, or found in the writings or speeches of gurus and consultants. They emerge from years of experimentation, trial and error, regime change, reorganizations, crises, and employee suggestions.

I agree that management is much more complex than books or simple theories claim. I think one of the great difficulties people have in evaluating management concepts is that the complexity (and interaction) makes it very difficult to evaluate (especially using accurate data).

Still, I think great management ideas are found in the thoughts of leading management thinkers (now it is true most I think most "writings or speeches of gurus and consultants" don't provide much use but the right thinkers do offer great value).

As Dr. W. Edwards Deming said there is no instant pudding for management (no quick fix). And management requires customization to the organization. You cannot just copy management practices from one place, where they are successful, to another. You can learn from what has been successful and adopt it to your organization if you have knowledge and theory and know how to test (pdsa) the effectiveness of new ideas in your organization.

I don't find many of the "secrets" mentioned to be the greatest ideas for management (the best ideas I find among the thoughts of Deming, Ackoff, Ohno, Provost, Csikszentmihalyi, Hoerl, etc..

Still, I believe it is good to learn about what others are doing. Then, as with brainstorming, what you learn about may lead you to a new idea that will work for your organization (you may also get lucky and find something that is almost directly applicable).

If so-called prediction markets--betting pools in which shares are traded to gauge the odds of upcoming events--can call presidential elections and Oscar races with accuracy, why not use them inside companies to identify their next hit products? The answer: It's a lot harder to tap into collective brainpower about a product's market potential, and other key business questions, than it is to foretell the winner for Best Picture.

In his first effort, Proebsting chose 25 programmers and quality-control testers from a team of more than 50 working on a new Windows testing application. Via an internal website, workers could buy shares for the month they believed the product would ship. Shares were valued at $1 apiece, and the engineers drew on accounts stocked with $50 each to fund their bids. Within minutes of the site's launch, shares for a February ship date shot up in value while those for November, the scheduled release date, dropped to almost zero. That came as a shock to the project director, who had heard nothing but optimism in meetings and e-mail updates.

This is one example of an intriguing idea I see here. I think I would see it as a management project that had a very high chance of failing (not providing a reasonable value for the effort expended). Partially this is because working to apply this would put you in largely in unknown territory. This has not been applied for decades by many companies and been refined to a point where experience has shown the strengths and weaknesses in this approach such as: what types of things is this a useful tool to manage.